Tuesday, April 19, 2016

More Things About Which I'm Curious...

We're hearing an awful lot about the terrible financial burden being placed on both college students and their parents to finance higher education. Some politicans {cough}feelthebern{cough} blame banks for the burden, as though evil bankers are running around putting guns to the heads of college students and forcing them to take loans at 180% interest.

Then there's stories like this:

Massachusetts man fights $250G student loan debt for his 3 kids
A Massachusetts man who owes about $250,000 he borrowed to put three children through college has won a major court victory in his effort to have the debt forgiven.

The Boston Globe reports that a federal appeals court has urged a bankruptcy judge to consider a settlement with the company that holds the loans to allow Robert Murphy, of Duxbury, to erase the debt.
Really, there's just so much wrong with this story, I don't know where to begin. On its face, it seems like a loving father that got in too much debt putting his kids through college. I can see that happening, especially if his kids got into prestigious Ivy League schools and didn't qualify for financial aid.

Except for this story that sheds a little more light on the situation. Like this:
Murphy sought to discharge the $246,000 he still owed on a dozen Parent Plus loans he took out between 2001 and 2007 to send two of his children to Loyola University Maryland and a third to the University of Connecticut and Bridgewater State.

“If I knew I was going to be in the situation I am today, I wouldn’t have borrowed,” Murphy said. Even though he was unemployed when the government issued him most of the loans, he said, he believed he’d find another high-paying job and be able to repay them.
Wait, wait wait... "Most" of the loans were issued when he was unemployed? He took on a minimum of a little more than half that debt after losing his job? And was unemployed for 14 years? Holy lack of personal responsibility, Batman!

But that's not what got me going. What got me going was that this guy spent nearly a quarter of a million dollars sending three kids to college, and one of the kids went to state schools.

No one else sees the real problem here? Bridgewater State - NOW - is under $10K a year for tuition, fees, and books. U Conn out of state (but in New England) is $20K a year. Assuming a 50:50 mix, let's say $50K of dear old dad's debt is from the one kid going to state schools.

That means the other $200K is split between the other two kids. $100K each, or $25K a year, in 2001 dollars. I tried to get a handle on whether this is reasonable or not, so I looked up the cost of Loyola University Maryland. Take a guess what a year costs there. Just guess.


It's $58,800 when you tally up room & board, meals, fees, etc. That doesn't even factor in books, so easily over $60K a year once you factor in books and other educational costs. $60K. Sounds like dad got off light.

Why is no one talking about the elephant in the room? Why is no one questioning why on earth it costs a gorram CADILLAC EVERY YEAR to go to a private university? Politicians complain about the loans, about the interest rates, etc. but no one bats an eye at a school charging over $60 grand a year? FWIW, Harvard is about the same price. U. Mass Amherst is $28K a year (in-state) with tuition, fees, room and board. A middle-of-the-road state school is nearly $30K a year?

Check this out, for U. Mass. In 1996, tuition and fees (MA schools "held tuition constant" while raising "fees" every year so they could claim, with a straight face, that "tuition" hasn't increased...) were $5,500. In 2015-2016, they were $14,100. In 20 years - one generation - the cost to go to U. Mass Amherst has very nearly tripled. The average cost of a car in 1996 was $16,000. If the price of cars kept pace with state college tuition, a new Toyota Corolla would cost $48,000. Instead, it costs $17,300, a tiny fraction of an increase in 20 years.

So, no. I don't buy it when some mealy-mouthed politician says that banks are the problem behind the high price of college.

But no one's asking why the price of college has tripled in a generation. No one. Bernie Sanders wants to give college away for free - sure, Bern, tell us how that's going to work. You've got college tuition kicking the living snot out of inflation, but magically it's going to become free thanks to... um... your magic unicorns? All of a sudden administrators and professors are going to administrate and profess for free? Pull the other one, it's got bells on.

But yeah, the real scandal is that a college loan interest rate is very slightly higher than that of a new car...

That is all.


Ted said...

The floor for most Ivy League schools for financial aid is ~ $125 K. Less than that and you are granted a "full ride". Only the very weathly wind up paying the full advertised tuition at the big name schools like Stanford MIT. Harvard Etc.

The trick is to get accepted in the first place. Only 8 to 10 percent of applicants . And thats an already small self selecting group.

..... And some schools like MIT are strictly Merit based. Legacy doesn't count. ( unlike Harvard and Yale ).

Ted said...

...... And those schools are also sitting on "endowments" in the 10's of billions ( yes ... With a B ). So it's not like they really need the tutuition money. ..... And that doesn't count the $$$ they earn through the affilliated spin offs. ( MITRE. , Linclon Labs , Draper Labs , etc. all linked to MIT ).

Same at Harvard

So the lesson here Jay. Make sure that the boy. And girl hit those books hard. .... And keep after them.

Wolfman said...

If I had been more inclined to make better decisions, I'd have attended Princeton in 2001. I had the grades, but didn't take the right tests, so never applied. Instead, I got a job, almost married a bad idea, and eventually found myself paying out of state tuition at Arizona State, where I had access to a bare fraction of the education value, but paid about 15% MORE per semester.

Sailorcurt said...

"But no one's asking why the price of college has tripled in a generation. No one."

Why do you hate education Jay?

Just kidding. Is it any wonder when every college and university thinks they have to have deans of multiculturalism and associate deans of diversity and individual Safe Spaces for each variation of skin tone and particular letter in the LGBTQEIEIO alphabet soup?

Kids aren't getting educated in college any more, they're being programmed. They're not being taught HOW to think, they're being taught WHAT to think...and a good number of them buy into it.

If I had it to do over again, I wouldn't have insisted my kids go to college regardless of field of study as I did, I would have insisted either an engineering type field or that they learn a skilled trade.

Good welders, pipe fitters, HVAC techs, etc can make a better living than most doctors under obamacare. Any degree with "studies" in the title isn't worth the paper its printed on unless they can get a doctorate and stay in academia. Most "arts" degrees these days are nothing more than an indoctrination into leftist theology. etc.

My son finished his education degree by keeping his mouth shut and opinions to himself. He'd come home and rant to me about the ridiculous tripe they were dishing out. I'm sure many of his fellow teachers can't figure out how he made it through the gauntlet considering his views.

Anyway, I'm ranting...I guess my point is that college should not be the destination, but just part of the journey. If your kids get to that age and have a plan that includes both college, and meaningful employment afterward with which to pay for it, more power to them. If they just want to go to college and figure out what they're going to do later...sign them up for the military, get them an apprenticeship with a skilled tradesman, find them an entry level position pretty much anywhere...let them experience the real world for a couple of years and then let them decide what they really want to do with their lives.

Going to college with no specific goal at the end is not only a waste of several hundred thousand dollars, but a waste of 4 good productive years as well.

In my humble (only educated to the Associate Degree level and doing very well for myself thank you very much) opinion.

Anonymous said...

Paying six digit 'salaries' to the likes of 'lieawatha' - for teaching ONE course certainly contributes to the problem.
I wonder if those of us who paid off our student loans ought to start screaming that we want to get reimbursed...............
Full disclosure: I went to a private college (now a 'university') and got through for a total cost (room, board, tuition, books etc) of about 10K for all 4 years - yes, it was a pretty long time ago! :-)

DSmith said...

Cost of college has more than tripled. I graduated from Texas A&M in 1990. It costs about $600-$700 per semester. My father made about $35000 per year. I did not qualify for any aid because he made to much money. Fast forward to today. Can I even think about send my kids to TAMU. It costs about $6000 to $7000 per semester. That is ten times what my parents paid for mine. Do you think my salary even comes anywhere near 10 time what my father made? If I made $350000 then maybe these college prices would not be an issue, But I do not even make a third of that.

Maureen Williams said...

I went to a private college also, back in the stone ages (graduated in '88) when tuition, room and board was about $14k a year. I was lucky, an only child, and between my parents, working all through college, and a couple of small student loans, I was out of debt in short order. It was actually harder paying off my credit card (at 25% interest back then, F**K YOU CITIBANK) than my student loans.

Today that same school is over $50k a year.

I got a solid business education and a degree that has served me well. My niece is now going to a (different) private college, with a similar tuition rate, but doesn't have a clue what she's going to study. I pity her parents paying that tuition and hope that she finds something useful to graduate with a marketable degree in.

Bostonbob. said...

My only argument would be that UMass Amherst is a mediocre state school. While my degree in Business from the early 80's was less than $4000 a year all in and my sons degree in Chemical Engineering was about $28000 a year we both got fine educations and good paying jobs out of college. Even at $28,0000 a year it can be worth it if you study for a degree that has value. My daughter is currently at UMass studying Biology in preparation to be a Physicians Assistant. Both worked hard on break and saved to help offset the cost that my wife and I covered and both will leave with less than $8000 in debt. A little skin in the game.

I cannot justify them charging what they do, but with over 35,000 applicants for about 3300 spaces that can set the market rate as they see fit. They have more customers than spaces. You currently need a 3.8 GPA to get a look at getting into UMass. College is sold heavily in the suburbs of greater Boston while many students would be well served to go elsewhere, but this is not usually the case. This parent clearly was not responsible spending what he clearly could not afford. If there were no student loans college prices would come down steeply. This is not what the government wants, so it will not happen until the system breaks.